Climate Inaction: A Gross Misdiagnosis?

12 May

Global climate change policy is often modelled by governments, analysts and academics as a free-rider problem. It goes something like this:

You are at a busy train station. Knowing you are unlikely to be caught by the lacklustre inspectors for failing to pay for a ticket, you decide to jump the gate and board the train. You repeat this decision every time you use the train system, continuing not to pay. Whilst you never pay for a ticket, the overall effect of your non-payment is incredibly low for the transport authority. The train system operators will hardly notice the missed payments of just one free-riding passenger. Trains and tracks will continue to be maintained, drivers will be paid, and the system will continue to run.

But what if, instead of just one individual, this behaviour was copied by everyone using the train? As you would expect, the transport authority would be unable to maintain its trains or pay its drivers, and the provision of train services would cease.

This is the free-rider problem, whereby if everyone was to copy the behaviour of the individual free-rider, the provision of the public good (train transport) would be uneconomical. However, the best outcome for each individual is still to free-ride as long as others are paying.

This same free-rider story can be told in the arena of international climate agreements, in which nations agree to specified emissions reduction targets. But here’s the trick. All nations benefit from the reduction of global emissions, in that their environments become more sustainable and less costly. And hence, emissions reductions can be thought of as a public good. However, only the nations who sign up to, and action, the agreement must reduce their emissions and therefore pay the price for a better global environment. Therefore, it is in the best interest of an individual nation, especially when they emit only a small proportion of global emissions, to free-ride on other nations emissions reductions and refrain from signing or actioning the agreement. Just like in our train analogy.

Australia contributes around 1.4% of global emissions. Clearly, it would be beneficial for Australia to refrain from committing to climate agreements, not have to pay the price of reducing their emissions, and therefore free-ride on other nations’ climate action. After all, why should the Australian taxpayer contribute any more to climate action than, say, Japan, Germany or India?

If this is true, climate agreements must surely be designed in such a way as to disincentivise free-riding. All nations, Australia included, should be shamed and punished on a global scale for failing to commit to and achieve climate targets.

But what if climate inaction is not really because of free-riding? What if our understanding of climate agreements has been wrong this whole time? What if we are wasting our time designing climate agreements such that free-riding is minimised?

The Misdiagnosis.

In their paper, “Prisoners of the Wrong Dilemma: Why Distributive Conflict, Not Collective Action, Characterizes the Politics of Climate Change”, Michael Aklin and Matto Mildenberger argue there is little empirical evidence that free-riding contributes to climate inaction.

In fact, the more pervasive cause is what they call distributive conflict, meaning governments are influenced less by external factors such as climate agreements, and more by internal forces, specifically their constituents.

Their argument goes like this:

Governments are subservient to their constituents (lobby groups, voters, political donors, and the media) as well as the stakeholders helping to keep them in power.
Climate policy creates economic winners and losers.
Constituents, and indeed the government they influence, are interested in continuing the status quo that enabled their success and power.
Governments are therefore encouraged to only pursue climate policy to the extent that it assists in maintaining power (i.e. enough to satiate the public).

Whilst this argument seems pretty logical, does it actually hold up?

By and large, and for some of the most important climate agreements created thus far, the evidence posed by Aklin and Mildenberger substantiates their claim. Let’s take a look.

The Evidence.

If we were to model climate inaction through a collective action framework, ‘defection’ by a large ‘player’ such as the U.S. should lead to widespread non-compliance by other nations. Despite historical climate inaction on behalf of the U.S., many nations (EU nations in particular) have consistently championed climate reduction policy. Examples of this include the wide array of carbon taxes implemented throughout the 2000s in the UK, Germany, New Zealand, Ireland, Japan, France, South Korea and Mexico in addition to large renewable energy subsidy schemes implemented in the UK, Germany, Czech Republic, Italy, Spain, Switzerland, France, Netherlands, and Japan in the same period. The adoption of such policy testifies to the willingness of states to independently implement climate policy regardless of the actions of ‘influential players’. The paper’s authors represent their point graphically, as can be seen below.

Graph illustrating the number of countries introducing a carbon market, feed-in tariff support for renewable energy and renewable portfolio standard (RPS) policies between 1990 and 2010 in spite of U.S. defection (shown via vertical line after year 2000). Climate action is largely unaffected by U.S. defection, where collective action theory predicts wide-scale defection on account of inaction by a big player like the U.S.

What we see here is not the expected outcome of collective action or free-rider scenarios often taught in university lecture theatres, or propagated by anti-climate opinion pieces in the media. But rather, it’s evidence of the ability of governments to mobilise in the face of an existential threat, regardless of peer support.

Another example used to substantiate this argument is Kevin Rudd’s signing of the Kyoto Protocol in 2007. The previous Australian Prime Minister, John Howard (1996-2007), had refused to ratify the protocol on account of U.S. non-participation. Seems like a free-rider situation, right?

Not necessarily. In fact, fossil-fuel lobby groups had an incredibly impactful role in the Howard Government, as they have for many decades in Australian politics. Nevertheless, following a change in power to Kevin Rudd in 2007, and thus a change in government constituency, the protocol was ratified despite continued U.S. inaction. Therefore, it makes far more sense to interpret Howard’s refusal to ratify the Kyoto protocol as a policy born of his constituency, not of U.S. defection — the excuse he gave to the Australian public.

Finally, the paper finds the noncooperation of a state to climate policy on account of free-rider problems does seemingly little to damage public support for climate action. Both Stephen Harper’s Canadian and John Howard’s Australian governments defected from the Kyoto protocol arguing that they could not contribute to climate action without U.S. support. Whilst this was the public claim made by both leaders and propagated in the rhetoric of national media, public support for Kyoto continued and inevitably led to change in both countries.

So what are the key takeaways?

Free-riding concerns underpin the rhetoric of climate policy, but there is little empirical evidence to suggest that the free-riding of a state will impact another state’s climate policy.
Institutions such as the Kyoto Protocol are intentionally designed to overcome (or at least attempt to overcome) free-riding concerns, however this should not serve as evidence that free-riding inhibits climate action
Public support for climate action is not impacted by rhetoric surrounding free-riding concerns.
The distributive conflict perspective yields significant analytical rewards in respect to international climate policy. As a result, the focus of climate policy should be re-centred on domestic politics and the role of constituent groups.

What does this mean for Australia today?

Australia’s environmental track record in recent years has led to the degradation of its reputation on the global scene. Recent comments made by UN Secretary-General Antonio Guterres further echoed international condemnation for Australian inaction.

With the upcoming Australian election looming, a change in government would bring about climate policy changes as per the distributive conflict framework. This would arise from the differences in constituency and support bases between Scott Morrison (and the Coalition) and Anthony Albanese (and the ALP). Such a change in policy will likely see a revised approach to the protection and management of the Great Barrier Reef, emissions reductions, bushfire prevention plans and, in general, the return of Australia to the international conversation surrounding climate.

Additionally, recent polls point to the upcoming election possibly producing a Labor minority government. In this case, a coalition between Labor and the Greens is a distinct possibility. As per the Greens’ policy statements, the proposed construction of new coal, oil and gas infrastructure projects will be met with vehement opposition. The bottom line is, a Labor government, in appeasing the Greens, would likely end up pursuing even more aggressive climate action, provided the Greens do not seek a repeat of policy decisions such as voting against the Carbon Pollution Reduction Scheme.

How do we curate climate policy given the prevalence of distributive conflict?

Future treaties and institutions should focus on increasing the power of environmental interest groups. Reductions will occur, regardless of international climate agreements, if the climate-related interest groups are empowered.
Anti-corruption measures should be in place within Australia to prevent the monopolisation of influence on governments. Increasing the power of environmental interest groups is important, sure. But not to the extent of hypocrisy. Whilst the power of coal and mining lobby groups be kept in check, so too must the power of any interest group. Any monopolisation of influence is detrimental to democratic ideals. The importance of this cannot be understated; lobby groups maintain influence that lasts longer than one election cycle.
The issue of dark money (secret money from untraceable sources which parties are able to avoid reporting on) is pervasive within the Australian system. Democracy For Sale, an organisation that tracks and records public donations to Australia’s two major parties, purports that undisclosed income accounts for 55% and 64.9% of the ALP and Coalition funding respectively. This highlights the need for more stringent donor laws that reinforce the transparency norms that underpin effective democracy. If we do not know who is influencing our major parties, how can we know for sure that they genuinely represent our interests?
The key to solving these issues is an independent media apparatus that holds the government accountable. Current debate on Australia’s media diversity occurs frequently, but is not the subject of this article. Despite this, it is clear that if Australia is to make progress towards relieving itself of corruption and dark money issues the ability of the media to operate in an unbiased manner is clear. Australians must persist in their efforts to achieve media diversity.

Aklin and Mildenberger’s findings don't necessarily imply that we should enact extreme or radical changes to environmental policy, rather we should challenge the long held assumptions of economists in a way that is conducive to change. Dogmatic economic thinking that attributes environmental policy inaction to free-rider problems and, more broadly, collective action theory has limited both discussion and research such that other pathways have been neglected. To face the issues of tomorrow we must evolve from the thinking of yesterday.